More than $70tn (£53tn) of inherited wealth will pass down the generations across the world over the next decade, widening inequality and highlighting the need for intervention by the G20 group of leading nations, a group of economists and campaigners have warned.
In a report ahead of the G20 meetings in Johannesburg, hosted by the South African government later this month, the expert panel said the gap in global wealth between rich and poor will widen over the next decade without a permanent monitoring group such as the UN Intergovernmental Panel on Climate Change.
The Nobel prize-winning economist Joseph Stiglitz said the report, commissioned by the South African president, Cyril Ramaphosa, found inequality growing in more than eight in 10 of the world’s countries.
The report said 83% of all countries, accounting for 90% of the world’s population, met the World Bank’s definition of high inequality. It added that countries with high inequality were seven times more likely to experience democratic decline than more equal countries.
Ramaphosa said the report by an “extraordinary committee of independent experts” had provided a “blueprint for greater equality” that supported South Africa’s G20 plan “to put inequality on the international agenda”.
Without endorsing the need for a high-level panel of experts to monitor the gap between rich and poor, he said: “Inequality is a betrayal of people’s dignity, an impediment to inclusive growth and a threat to democracy itself. Addressing inequality is our inescapable generational challenge. This report lays out prudent and pragmatic steps we can take to reduce it.”
The G20 was established after the 2008 banking crash to be a more representative group of the G7 group of the world’s richest nations. It includes Saudi Arabia, Mexico, South Africa and the UK.
Campaigners expect several G20 countries will back the demand for a panel to monitor inequality, including Germany, before the ministerial meeting on 22 November.
Stiglitz, a professor at Columbia University and the chair of the independent experts, said the committee’s main recommendation was for the G20 to establish a permanent panel that “would monitor trends and assess its consequences and evaluate alternative policies for addressing it, to inform governments, policymakers, and the international community”.
Stiglitz said studies have shown a widening gap between rich and poor undermines democratic institutions and fuels populism.
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The report said new analysis showed that between 2000 and 2024, the world’s top 1% captured 41% of all new wealth, while only 1% went to the bottom 50%.
The committee said a groundbreaking study by the Italian economist Salvatore Morelli showed as much as $70tn of wealth would be passed to the next generations by 2035.
“Wealth inequalities have a forward momentum, as compound interest increases fortunes and, in the absence of effective inheritance taxes, wealth is handed down from one generation to another, undermining social mobility and economic efficiency,” it said.
